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Smog in Beijing
Image: picture-alliance/dpa

Sustainable growth

Andreas Becker / ara
June 16, 2013

When it comes to economic growth these days, people often point out that it must be sustainable or "green growth." To what extent is a combination of economic growth and sustainability really possible?


With its Energiewende, the energy transition policy from nuclear to renewable energies, Germany aims to gradually increase renewable energies like solar, wind and hydroelectric power. Some say it's an important step towards a more sustainable lifestyle. But not Karl-Heinz Paque.

"If we do these things in Germany, it's not really going to have much of a global impact. We're too small for that," Paque, a professor of economics at the University of Magdeburg, told DW. "It's going to be decisive what happens in those countries that are now trying to catch up on economic growth - and they make up two-thirds of the global population."

Should developing countries and emerging economies follow the path Europe took? For centuries, Europeans fostered their own economic growth and wealth, before discovering their heart for environmental protection.

"Environmental protection as a priority stems from affluence," Paque said. "For us, it only started in the 1970s, no earlier. In China, it's only just beginning, and it will take a little longer in India."

Comeback for coal

There is much to make affluent and environmentally active Europeans nervous. Across the world, coal - the energy source that in most European countries has a reputation as being particularly dirty - is booming.

"Coal is about to enjoy the biggest renaissance in the history of economics," said Ottmar Edenhofer, deputy director and head economist at the Potsdam Institute for Climate Impact Research.

In the 1990s, many countries substituted coal with gas. But this trend is now being reversed, since coal has become "incredibly competitive," Edenhofer said.

Two Russian men fish in a lake across from a factory
Attempts to limit greenhouse gas emissions internationally have been unsuccesfullImage: picture-alliance/dpa

"Above all, China's economic growth is strongly powered by cheap coal. The same holds true for India, South Africa, as well as some Eastern European countries," he added.

When coal or other fossil fuels are burned, CO2 is emitted, polluting the atmosphere - and contributing to making climate change more likely. Projections by the International Energy Agency (IEA) say that annual medium temperatures could rise 5.3 degrees by the end of the century, if countries across the world don't take action.

But negotiations towards a new international agreement on climate protection have been a failure. Whether it's about limiting greenhouse gas emissions or agreeing on emission rights trading, the interests of the various countries are simply too different.

Devaluing resources

"A global climate agreement would probably lead to a reduction of coal and oil consumption," said Carl Christian von Weizsäcker of the Bonn-based Max Planck Institute for Research on Collective Goods.

That, in turn constitutes a problem for countries with large fossil fuel resources. "A climate agreement would lead to decreasing prices for the resources in these countries," Weizsäcker said. "That makes it even harder to reach an agreement."

To complicate things further, some countries are changing their negotiation positions. Since new oil and gas fields were discovered in Kenya, and Canada found ways to make tar sands exploitation more lucrative, these countries have practically lost interest in a achieving climate agreement; Any limitation to pollution would reduce the value of their resources. 

After the failure of the UN climate talks in Copenhagen in 2009, the chances of reaching a quick agreement are slim, many experts fear. And it's even more unlikely to expect countries to agree to less, or no, economic growth. Even so, many environmental activists in western industrial nations dream of a world in which economic growth is unnecessary.

Improvements without growth?

From a global perspective, zero-percent economic growth is not a serious option.

"The huge disparities, for instance between Africa and Europe, or between Africa and the Americas would be not acceptable," Ottmar Edenhofer said, referring to calculations he undertook for the Potsdam Institute on Climate Impact Research.

Traders work on the floor of the New York Stock Exchange (Photo: Spencer Platt)
Few, if any, countries in the world are likely to agree to limit their own economic growthImage: Getty Images

"For Africa to reach living standards similar to those in Latin America, the United States would have to reduce its per capita incomes by 80 percent," he said. "Resulting social conflicts would be severe."

Thus, it seems unlikely there will be a conscious limit to economic growth, just as it's unlikely universal targets for climate protection will be agreed anytime soon.

Regional efforts, such as the trading of emissions rights within Europe, only work partially or not at all. That's why many experts see humanity steering towards an apocalypse.

Economist Karl-Heinz Paque, however, is cautious when it comes to such scenarios, pointing out that reliable predictions about the future are simply impossible to make.

"Imagine you had made a prediction in 1913, exactly 100 years ago, about the future of the world - but starting from the state of technological development back then," he said. "What has happened since, within less than three generations, would have been completely beyond your imagination. That's why we have to be very careful about our predictions."

Don't panic, humanity will come up with solutions - that seems to be the bottom line to this argument. Paque, who has been active in politics with the liberal FDP party, believes such technological progress can be reached with as little state regulation as possible.

Yet Gerd Wagner, who heads the German Institute for Economic Research (DIW) in Berlin, argues that regulations set by nation states will indeed be necessary. "If you want to reduce environmental exploitation you need regulations."

The interviews for this article were conducted during an event organized by the Academy for Civic Education in Tutzing, Germany.

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